$90M fund with links to defunct BTC-e exchange seized in New Zealand

The New Zealand Police’s Asset Recovery Unit has restrained NZ$140 million (US$90 million) from Alexander Vinnik, the largest restraint of funds in New Zealand police history. 

Alexander Vinnik is the alleged operator of the now-defunct digital currency exchange BTC-e, as well as its shell company, Canton Business Corporation. BTC-e didn’t have anti-money laundering policies in place, which authorities said led to criminals using the exchange to launder money and liquidate an estimated $4 billion in illicitly obtained assets. 

In 2016, BTC-e and Vinnik were formally charged with operating an unlicensed money service as well as conspiracy to commit money laundering. However, it wasn’t until 2017 that Vinnik was arrested in Greece, and extradited to France. At the time of his arrest, France, U.S., and Russia fought over which country Vinnik should get extradited to and face charges in.

In France, Vinnik was charged with extortion, aggravated money laundering, conspiracy, and harming automatic data-processing systems. It is expected that after his case in France is complete that Vinnik will be sent to the U.S. and then Russia to face charges in each location.

Why New Zealand?

The New Zealand police seized Vinnik’s funds once they discovered the Canton Business Corporation was holding its funds in a New Zealand company.

“The global criminal community needs to understand New Zealand’s financial system, and companies established here, are not the places to try to hide illicit income,” said Police Commissioner Andrew Coster.

The process to set up a business entity in New Zealand is relatively easy, that it attracts criminals who create shell companies in the country—similar to what Alexander Vinnik has allegedly done. 

“However, this restraint demonstrates that New Zealand is not, and will not be, a safe haven for the illicit proceeds generated from crime in other parts of the world,” Coster said.

The US$90 million restraint goes to show that New Zealand is keeping an eye on the entities that establish businesses in their country and that if an individual creates a business in New Zealand with criminal intent, that they will face consequences.

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